Skip to main content

tv   Squawk Box  CNBC  November 6, 2019 6:00am-9:00am EST

6:00 am
2019 "squawk box" begins right now. ♪ >> good morning, welcome to "squawk box. we are live in time square andrew is hosting the deal book conference with a huge line up including the ceos of ibm, boeing, microsoftand more. we'll bring you coverage later in the day our guest host today is suvita great to have you here today >> great to be here. >> the market is pushing higher.
6:01 am
>> i know. all-time highs we have like, what, 39 trading days to go >> is that it? >> it is a tight time frame here the interesting thing around the market is it has shrugged off concern. one of the reason the market has gone higher is because of really light positioning. that mentality hasn't changed. that has fuelled the rally in the market >> you see the dow in the green but just barely. nasdaq futures down by a point again, we are sitting at new highs after the gains we added on yesterday you look at the treasury market yielding 1.85%
6:02 am
>> xerox looking at buying hp. the company has an informal funding commitment xerox has a market company a third of hp. both of these companies former technology stall waters. xerox has had a couple of falls. do people steel xerox things it is like faxing. >> hp has tried to keep up it is like help me i'm drowning. >> hp shares are up. >> xerox somehow is the
6:03 am
acquiring company. and there would be a premium to hp's market cap. i just get depressed reading this xerox already scrapped the deal to merge with fuji film. i should have never vested in all those photo mats i thought we'd always go there half the ones i turned in, they wouldn't give me back. >> what kind of pictures were they >> i'm kidding i thought, what happens to the walgreen's billboard exploring a plan to go private in what could be the largest leveraged buy out. with a market value of about $55
6:04 am
billion. one firm looking at the deal is kkr. and every core partners is exploring whether a transaction can be put together. >> why do they want to go private? >> for walgreens right now with health care in the background. >> with the election and everything going on. >> they are probably uninvestable until we get to the election >> a lot of changes. >> they heard elizabeth warren's plan and said, okay, let's go private? >> the background right now is confusing, daunting, changing all at once. >> every day you hear a any plan in the crosshairs. >> you could say, look to respond to this, we are going to
6:05 am
have to do some stuff we don't want to know about >> you probably don't want investors who are nervous. who is the easiest person to blame for health care costs now. the middleman. a lot of these companies, a lot exist because they are middle men. don't they >> yes >> you ask anyone on the street, what is the problem, they'd be able to come up with the term middleman. >> the new hmo >> i don't think they were ever, we still depend on hmos. >> but that was like during hillary clinton. >> she was going after health care >> the medicare advantage is not
6:06 am
a bad thing either but they get blamed >> costs are rising. >> costs are rising. it's a huge part of the consumer wallet what percentage of our wallet do we spend on health care? >> it is huge. i think it is mandatory. one thing we noticed in 2016, you didn't want to touch health care until after the election, then it was a good buy >> then it was a great buy the low probability of actually happening but the headline is enough to keep generalists out of the sector. >> i can understand why a management team would want to keep out >> exactly the journal's piece is about how much investors have socked away incash
6:07 am
i think 60% is warren buffett. if we are at 3,100, basically, do we believe some of that is going? what does that mean? every person on the street is wrong? >> exactly right who are all these people 14 out of 17 are down at like 2,900 of the stock experts they are all have going to have to raise their targets >> these are end of the year targets. we could see what happens over the next seven weeks
6:08 am
>> i think the risk is you've got a bunch of people sitting on cash this has been the story for years, they haven't come in yet. what are they waiting for? >> that's why you won't see a pull back. >> i agree i think the levels of cash show how risk averse they are they don't want to hear about the rumblings of recession the idea that all this cash is going to flood into equities isn't easily the case. they've been on the sidelines a long time. this is super bullish for stocks if it has been sitting on the
6:09 am
sidelines now. hasn't been sitting that quietly. >> that's the money that came in >> yes for the year >> they were probably not up that much from january 2018? >> consolidating the gains starting on election day it started november 9, 2016. to consolidate a 50% gain in the stock market we are still we'll see. we are closing on 28,000 on the dow. after that is what >> 29,000. >> yes and after that. >> 30,000. guys wrote about that and were laughed at >> what did we hear from ron
6:10 am
barron >> where would i possibly start? we heard about mars and the assassinations in the 60s. >> he talks about where the dow will be 10, 20, 30 years from now. >> it will double over the next 10 years >> that's a crappy return in 10 years. >> it is still a big number. you could say the s&p is going to be 6,000 and people freak out. >> they are yelling. >> who is? >> i'm not going to out them >> evans he says it wasn't him. >> it was you a minute and a
6:11 am
half ago we digress >> talking about another big story. softbank reported the first quarterly loss the vision fund suffered a loss of $8.8 billion. the vision fund has vested $70.7 billion in 88 companies and as of the end of september, those investments are worth $77.6 billion. the value decreased by $3.4 billion in the second quarter. at a news conference, masa son didn't mince words >> we have the earnings result announcement is not good at all. it is a big negative
6:12 am
the three month quarter result the size of the negative probably the first time since the foundation of the business i want you to take a look at this picture we are actually in the rough sea. >> that's was masa son taking it on the head. jp morgan ceo addressed the issue yesterday. here is what he said >> i don't believe they have a $ $47 billion valuation. they are all different some of these companies have unbelievable technology, some are venture. some are trying to grow so fast.
6:13 am
there are less ones to be learned about these. how you go public. those less ones should be learned by everybody that wants to go public >> jp morgan has gotten a lot of flack. the good news is that it made its way. these guys are eating it instead of the public. that would have been a much bigger problem >> it is interesting, if you look at the number of unprofitable ipos now, it is bigger than the tech bubble. i think that tells you a little bit about the private markets.
6:14 am
masa son was pushing that. people will look at the miss keep amazon never lost billions a year >> i think it is overrated to start with are they making money? >> people think you are serious when you do that >> she is serious. elizabeth warren is serious. >> a little facisious. >> you ask any millennial, they would say it is greed and a bad idea they have no idea how economy works and prosperity comes from. they think if you get rid of
6:15 am
expenses in health care. >> that was boomers. >> the millennials, there are a lot of them. that's the difference. >> 70% think that some type of socialism is a good idea 70%. >> that's new. >> if you don't have the view point that the private sector treats cap ca treats capital than a public k sector >> obama looked at that with obama care there are an increasing number of ceos, leaders in business who are worried at this points they are losing the battle. they are looking at the bad
6:16 am
guys they are making that term trying to make that they look at it as an out reach program. they are worried about the barbarians at the gate but they need to grow a spien >> where does kindness come. >> growing and lifting the tie so you can use tax dollars they are trying to show people that's exactly what they are doing. when haf said is taking care of all of the constituencies. maybe it is a time to start talking about these so people are aide educated. >> coming up, ready forred too's
6:17 am
trading session. they could movethe markets next each day our planet awakens with signs of opportunity. but with opportunity comes risk. and to manage this risk, the world turns to cme group. we help farmers lock in future prices, banks manage interest rate changes and airlines hedge fuel costs. all so they can manage their risks and move forward.
6:18 am
it's simply a matter of following the signs. they all lead here. cme group - how the world advances.
6:19 am
6:20 am
>> on today's squawk planner, third quarter productivity data. qualcomm, excepedia, square and roku getting back to the markets. joining us, believe al market strategist and our guest host is with us. head of quantitative strategy at bank of america, merle lynch a lot of money on the sidelines, does that make its way in? we are almost at 3,100 on the s&p now, what is possible. >> i think there is a narrative
6:21 am
that it is kind of dry powder. you look at what is going on with the consumer today. you look at the state of the labor market you look at consumer confidence what needs to happen to get that money to work. what people are looking for is a little more certainty. we've made a lot of progress with respect to trade there is still an element of caution. when we talk to clients, we still pick up on a lot on their
6:22 am
part tariffs are still on and we are at a high. i think the smooth transition from where we are with respect to trade to have that type of certainty, we are making forward progress i think the market is pricing in the idea of smooth sailing >> the market stabilizes trade where we are that is something in it self-. >> companies have been working on sourcing from outside of china for decades now. this isn't something they were completely unprepped for >> i agree they'll been try forge a long time to get out of china and get
6:23 am
elsewhere. >> this also speaks to the resilience of north america. they are really good at adapting to whatever policymakers throw at them. >> why not be more bullish then? >> i am bullish. i just think in the last 12 months, there is a lot to get through. >> my official year-end target is 2950. >> you can't be right on both. to be right on the direction is one thing. >> that is pretty good versus what happens in the market over the next five years.
6:24 am
long term investors need to recognize you are loo locking in to this volatility i agree with the point you made on tariffs it is really two steps forward and one step back. i'm not sure we are at the point to sound the all clear absent any change is looking a little more softer than what we've experienced. >> we are in a trade war and constitutional crisis. >> there is no place else to go. >> that still holds. look at cash deals, bond deals you can pay to vest.
6:25 am
>> what pmi's do don't really tell you about market performance. what they reflect is more significant. what is complimenting what we are seeing on trade is the fact that inventory growth has stabled out. i would argue butted heads it is more about the global activity stabilizing there is a fundamental play at stay >> thank you >> when we come back, dating and dieting. two of the market's biggest movers we'll talk more after the break. (vo) the flock blindly falls into formation.
6:26 am
flying south for the winter. they never stray from their predetermined path. but this season, a more thrilling journey is calling. defy the laws of human nature. at the season of audi sales event. ♪ ♪ "um houston, we've had a problem"
6:27 am
problems. it's human nature to hate problems. but why is that? after all, problems inspire us to mend things, bend things, make things better. to rewrite the rule books, the history books, and future books. that's why so many people work with ibm, on everything from city traffic to ocean plastic. from new schools, to new energy. from flight delays to food safety. the problems even got us to the moon and back on one tank of gas. and who knows where they'll take us next. ♪ ♪ it's how we bring hope to our patients-
6:28 am
like viola. her team treated her cancer and strengthened her spirit. so viola could focus on their future. cancer treatment centers of america. appointments available now. man: can i find an investment firm that has a truly long-term view? it begins by being privately owned. with more than 85 years of experience over multiple market cycles. with portfolio managers who are encouraged to do what's right over what's popular. focused on helping me achieve my investors' unique goals.
6:29 am
can i find an investment firm that gets long term the way i do? with capital group, i can. talk to your advisor or consultant for investment risks and information. . >> time for the executive edge two of this morning's biggest movers match shares are falling the owner of dating apps warn the current quarter will come in lower than expects because of rising competition like bumbell and facebook as well shares of ww, formerly known as
6:30 am
weight watchers are down sharply. the number of subscribers rose nearly 6% and growth closed. this stock has massive swings up and down remember when oprah got involved and there was a huge oprah effect this is a volatile stock >> it is i think we are at a really pivotal part of the market right now the last month and going forward. we are in a big rotation you look at tha what's working, it is very different from what worked in the last cycle this goes back to the idea that some of the economic data is starting
6:31 am
to bottom. >> particularly for caterpillar when you look at growth overseas >> absolutely. that is pushing a lot of these crowded darling stocks lower as investors sell them. this is a really interesting point in the market. this is a lot of money to be made from the internal rotation. >> coming up, watch out, a hidden feature in the amazon air buds may signal the company's entry into this tracking world and lockup expiration date for uber we'll talk about that straight ahead. >> announcer: today's big number 1.7 billion. that's how many rides anfod od
6:32 am
delivered by uber in the third quarter. up from the same period in 2018. through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business. from managing inventory... to detecting and preventing threats... to scaling up your production. giving you a nice big edge over your competition. that's the power of edge-to-edge intelligence.
6:33 am
6:34 am
6:35 am
>> good morning. u.s. equity futures are mixed. the dow up about five points the s&p down yesterday now it is up it was down yesterday even owe the others were up it is unchanged, the s&p but it has been trading at a series of new highs. the nasdaq is off. cvs health is out with profit earnings beating estimates by seven cents. registering a 3.6% increase. stocks up 3.25%. amazon reportedly testing a feature that would allow echo buds to track work outs. the head phones launched in october during a test run, cnbc found a fitness section. >> i couldn't believe it
6:36 am
i was looking through the code to familiarize these >> was it in python? >> it was high performance pass call no it was not me. it trincluded options to track work out if amazon launches a feature it is so weird they put it in like a beta version. >> you leave a place holder for it that wouldn't surprise me. there are things like with tesla where they leave place holders. >> it would be -- amazon's first foreray into the fitness monitoring space a lot of people think that's the future for companies like apple.
6:37 am
>> the problem is that so many companies think that is the future if you can take that with you and if doctors could read it and hospitals can read it along the way. how profitable would it be for the businesses >> when we come back, uber's post ipo lock up expires today later, a-rod is back in the game he joins us to talk about his new show and what he's done what real es skate, what he sees for other athletes robinhood believes now is the time to do money.
6:38 am
without the commission fees. so, you can start investing today wherever you are - even hanging with your dog. so, what are you waiting for? download now and get your first stock on us. robinhood.
6:39 am
6:40 am
♪ ♪ ♪ ♪ ♪ don't get mad. get e*trade, dawg.
6:41 am
>> expiration day is here. early uber investors are allowed to unload shares in that six-month period, shares have tanked almost 68% right out of the gate. with us, founder and ceo of tusk ventures i thought there was good stuff in the report. >> i think there is two fundamental problems one is uber hasn't done a great job of why people should bet on them for the long term uber, slack, peloton, there is a fundamental miss alignment between the private market an public market. they'll say until we get to a price point that makes sense, we'll keep selling and going
6:42 am
lower. can uber be a really great company? yes. could they be a $40 billion company, maybe i hope so because i still have quite a few shares frmt. >> in a zero interest rate world, should we be surprised. >> i think it is on more than that if you are a megafund, you calculate my 2% management fee and money i need to pay all my bills. i'll raise the fee to 50 times that they deploy them at really high valuations the wrong incentives are driving the valuations it gets to the market, the public investor is saying this is not my problem.
6:43 am
>> the difference between lyft and uber, supposedly making money on the basis on ride sharing and losing money on the other uber eats. >> unless uber ziebs to live in a woshld with a lower valuation, you can't just be ride sharing, you have to be freight and eats and other things >> margins are going to get squeezed too >> the one good effect is that some of that sub sidization has stopped happening. they could do it in unlimited fashion. on top of that, california has pass passed legislation that turns all uber and lyft drivers into
6:44 am
employees. that will impact if other states follow suit. >> i heard that these companies are battling for the prime markets. nobody wants to push into the suburbs. >> right when you ask the driver, it is a hard job you need a lot of volume to make it work. you are sitting on the side loins a lot, the image doesn't really work. >> there is about 545 million shares now under water you were really early investor so i'm guessing you are not under water? >> are you going to sell today >> i am going to sell some
6:45 am
i sold about two-thirds to softbank i thought i was selling at a discount turns out to be a premium. >> are you worried at thaul that sa this will become less an less attractive >> right the way people work has changed. people want to work in a different fashion. there is enough uber drivers but there needs to be enough demand. making drivers full time employees drives up the cost
6:46 am
>> as an early investor, you are not concerned? >> anyone else going to sell with the lock up >> a lot of employees, keep in mind, you've been rich on paper. you've not had that much cash, more or less, you've been waiting for this decade. a lot of people are saying, i've got to make this mortgage payment. >> they are unloading bag holders and cashing out when they should be buying. >> i don't know buying >> holding >> so you are not opposed at all? >> until they hit profitability. because the earnings were a
6:47 am
little better than expect. until the fundamentals change, it is not going to do it >> coming up, c suite churns with 172 ceos leaving their post in october we'll discuss what is behind the trend. >> announcer: don't forget to subscribe to our pop cast. you'll get interviews, content, look for us on your apple app and subscribe to "squawk box" today. are you ready, dad?
6:48 am
i'm ready. imagine if your life insurance could help you live for today and safeguard tomorrow, so you're ready for anything. life insurance designed to protect generations of families. that's the power of pacific. ask a financial professional about pacific life.
6:49 am
6:50 am
welcome back, everybody. ceos left their post at a record pace from challenger, gray and christmas says 172 chief
6:51 am
executives moved on during the month of october joining us to talk about whether this is part of a larger trend is maggie willederbrocker. she's the former chairman of frontier communications and she's on the boards of lyft, costco and docusign. thank you for being here. >> it's great to be back. >> is there something new afoot or is this a one off >> i think 40% of that number have left for some kind of controversy. that is new. there's a lot more controversy. >> you don't think there's more bad behavior >> more scrutiny i would hope there would be less because there is more scrutiny in transparency. >> you get paid a lot. you should be good in what you
6:52 am
do and there should be turnover. >> and they have to be held accountable. >> but the controversy is a lot of times that you suck at being a ceo, right >> you haven't gotten results. >> it's not always fraudulent or a relationship which also -- it's always been a me too. even back then it could cause a downfall. a small number are situations like that. the vast majority are crappy numbers on earnings day, right >> well, it's usually a pattern. >> of crappy numbers on earnings >> yes where boards lose faith in the ceo and don't think that's the right person to turn things around. >> it's not easy >> is it easy to navigate this
6:53 am
world nowadays and inventory management. >> no. nobody said it was going to be that's why you work your way to get it. coming to celebrate companies that have more than 30% women on their boards i'm here to tell you that at the 30% level we're up to 323 companies. >> that's great. that's a huge change. >> where was it? >> two years ago it was about 158. >> wow >> so we're making really good progress if you look at the last several
6:54 am
months, it's really exponentially starting to take off. >> why do you think that is? >> you know, i do think that it's good business to have diversity in the board room. you make better decisions. you have a better way to coalesce around challenges and opportunities and i think there's a lot of very qualified women out there that have made their way through the pipeline into higher level jobs in companies. maybe not necessarily to that ceo position yet, which is -- we're all hoping that continues to move up, but there's a lot of women that, you know, are in marketing and that are in sales and cyber and have the capabilities of operating divisions of companies that can bring a lot to the table >> and it's interesting. we've looked at this for retail companies. if you have an all male, all white, older board that's completely disconnected with the consumers that are actually shopping at these stores, that's
6:55 am
a huge risk to your business model. the leadership team is not necessarily reflecting the needs of the actual consumer base. >> that's right. >> there's a real linkage to actual economic success from diversity. >> and it's also good for the employee base. there's a lot of women that work in retail. there's a lot of women that work in all different industries and to have a board be reflective also of the employee base and the culture of what's going on in those companies. >> exactly. >> which drives the values that drives results for the business. >> it's funny that we're looking for boards with more than 30% women. really, half of the boards of every corporation should be women. >> right >> that's our population that should be reflective. >> if you look at the s&p 500, 1,000 together, it's only about 3% are women there's a long way to go to get to gender parity we're on our way and i think that's important i also think that ceos have
6:56 am
found it's good for them it's good business for them to have a good point of view. >> do you think dennis muilenburg can survive >> i hope so. >> you do? >> i think he's working hard. >> i think his chairman came out -- >> when was that >> oh, you saw that. >> yeah, yesterday >> i saw -- did you see some of the -- afterwards, becky, that said the crisp responses that calhoun gave to all the answers was in stark contrast to what happened in front of congress with the ceo. >> right. >> i was -- you know, we were part of the interview. that's sort of my take away, too. they were crisp, weren't they? >> absolutely. >> the stock was up -- >> he's a very talented individual. >> i think stock was up 8 or 9 -- >> i actually work with him at blackstone >> you're over there, too? >> yes, i have been for almost five years he's very talented and he's very committed to making sure boeing is successful. he's doing a good job. >> i think a lot of people are
6:57 am
pulling for boeing. >> yeah. >> why wouldn't -- it's one of our premiere companies. >> yeah. >> the engineering that goes into those planes and the safety record over the past 50 years. >> it's amazing. >> it is >> and they have to work hard now at building trust and getting trust back one more thing on the women's side for boards. i chair the docusign board, lyft, costco the cadence designs board as well and the hpe board which i wanted to mention pat russo is the chair of the board i chair the audit. >> i don't like the makeup of this board can we get a man out here please would you say by definition -- no, we need two more >> at least. >> sabina, she said it has to be exactly 50%. i need two men pull up a chair, kyle. >> we're out of time thank you very much. >> you're welcome. i will be back soon. >> sabina, thank you. >> are you leaving >> i am. >> when we come back, a-rod is
6:58 am
here alex rodriguez is our guest host we have his new cnbc show back in the game that debuts tonight right here on cnbc we're going to get a behind the scenes look. your employees must love you. thank you. ah, you could say that. so how are things with you guys? great. thank you. thank you, sir. lunch next week? terrific. say hi to the team. will do. call my office, i will. -sounds good. alrighty. servicenow. works for you. but in my mind i'm still 25. that's why i take osteo bi-flex, to keep me moving the way i was made to. it nourishes and strengthens my joints for the long term. osteo bi-flex - now in triple strength plus magnesium.
6:59 am
rowithout the commission fees and account minimums. so, you can start investing today, wherever you are
7:00 am
even on the bus. ooh, like this guy. yeah, i bet he's investing right now. he's taking charge. he's grabbing the bull by the horns! and he - just missed his stop, yeah. it's time to do money, so what are you waiting for. download now and get your first stock on us. robinhood. was a more secure diaper closure. there were babies involved... and they weren't saying much. that's what we do at 3m, we listen to people, even those who don't have a voice. we are people helping people. markets on hold. phase one trade deal where should you be putting your money to work. some of the biggest tech bets.
7:01 am
and alex rodriguez is back in the game. good morning, everybody. welcome back to "squawk box" on cnbc i'm here with joe kernen andrew is at the dealbook conferen conference he's going to be speaking to some of the biggest names in the business, dennis muilenburg and jenny rometti. we have an all-star guest host with us this morning, alex
7:02 am
rodriguez. future mlb hall-of-famer and founder and ce off of a rod corporation. >> it's hard i'm a cleanup hitter and here i am. >> what world is that -- okay, you can say that that's nice. we're co-workers now we're colleagues. >> we are. >> we're going to talk all about that it's a great idea. >> "back in the game". >> great idea. >> to help people and to watch you do it, too. >> it's an unfortunate thing it's an opportunity to educate, entertain and inspire. great people, great athletes fall into tough times and they have a potential to be great, they have the people, the process, they need governance. i think you'll be entertained and really educated with how people can lose up to $260 million. >> we've seen that movie before. way too many times as we know. for every a-rod that has a
7:03 am
company and amasses a great business, how many employees 500 employees in your real estate business? that's just one thing that you're doing on the flip side, there's a guy like the great fighter that everyone loves, holyfield. how much did he have more than -- >> north of 250. >> 250 million. >> and now needs like a restructuring almost >> yeah. yeah you don't have to be an athlete or entertainer to fall on hard times. he's a four-time world champion. i don't think any of us or anyone watching would want to get into the ring with evander holifield. we travel the world. we have the world series eight or nine countries represented. the yankees have tanaka, we have shellez. we travel the world for talent, but when it comes to people handling our money in sports, athletes, entertainers, we just
7:04 am
go back to our neighborhood and say, who's the guy that a-rod's using, joe. >> or becky. >> or, worse, there are guys that come in and do exactly what they should not be doing they get taken in. we'll talk about this. let's get into a couple of headlines. here's what's making headlines xerox is mulling a takeover bid for computer and printer maker hp, inc. tough sledding for the printer business for hp and what do you need to say about xerox? "the wall street journal" said the board discussed the idea of a cash and stock offer yesterday. there's no guarantee that xerox will follow through. how are they making a bid for hp it's been done before. reverse pacman or something. that's what it used to be called still a little weird as we pointed out, xerox recently sold its 25% stake in
7:05 am
another burgeoning industry, fujifilm you get some pictures. >> it's not the market it used to be. i think it's an understatement of the year. >> the world has moved on. like globe records at the mall not a lot of those places. >> you know vinyl outpaced cd sales for the first time since 1986 or something. >> vinyl is -- it's cool again. >> elsewhere, softbank has reported the first quarterly loss in 14 years the company was hit hard by an $8.9 billion loss at its vision fund that adds up after a while 8.9 billion. it's a significant investor and troubled startup, wework softbank reported an overall loss of 6.5 billion for its fiscal second quarter. we'll have more later this hour. >> alex, maybe you could advise masa son
7:06 am
>> has he fallen on hard times >> if you are an officer, he starts with fundamentals and fundamentals are going to die. i like to buy ebitda, boring stuff. those investments are evergreen as long as you're buying right and you have 10 to 20 year horizons on your investments. >> if you get taken in on an earnings per share number. you may or may not know the true state of the number. >> free cash flow. >> that's always valued itself on free cash flow, not on this other stuff. interestingly -- >> that's why directv is valuable to at&t >> exactly free cash flow. let's talk a little bit about the markets this morning we did see the markets set new highs once again yesterday
7:07 am
our next guest says that they could head even higher from here but there are fundamental risks. joining us is joe zied dell, investor strategist at the zone. we could head higher or there are fundamental risks. which one comes out on top >> i think the fundamental risks are coming out on top. it is fundamentals they are evergreen 2019 has been a year that's been dominated by interest rate cuts, liquidity, central bank activity and as a result investors bid up risk assets, not only quit at this, without paying much attention to the fundamentals. you're looking at profits growth which is negative on a year over year basis profit margins have rolled over and revenue growth has basically slowed to a crawl. >> let me counter those points to play devil's advocate on this we have seen earnings slow we have seen these things happen that's why you saw the markets
7:08 am
go down so significantly in the final quarter of last year a lot of what it is is win back those losses. >> you always have this tug of war between profits and interest rates between the fundamentals and the liquidity. what i would say, we're up 23% this year. the conversation has been, number one, about central bank easing you think about why central bank has been cutting recession risks have been higher to have equities rallying in the face of that increased recession risk is a little bit at odds. >> way too bearish, you know that. >> you've been way too bearish in the last three months. >> i hate to come on the set and be bearish >> we're not the ones wrong. >> 28.75. >> you're sticking with it now >> that is -- >> when do you throw in the towel and say, oops?
7:09 am
>> maybe about 30 seconds ago, joe? >> so, you know, where we are is we're looking at these fundamentals i think the prices have got ahead of it. >> maybe. >> you have central bank activities just dominating the conversation and, becky, to your point about all of this being priced in, you're right. maybe something was priced in when we went from plus 12% to negative 10%, it's not as if the clouds are parting now third quarter earnings are not really that good fourth quarter are not going to be that much better. when we talk about 2020 there are cracks out there that su suggest the environment is it not going to be that much. >> let's talk about there is no alternative. if you leave your money in cash, you're getting nothing back on it if the fed tuts interest rates if you put it overseas the bond will cost you money. hard to find places where you put that cash. >> that argument though in a late cycle environment where we
7:10 am
know at some point growth will slow and the risks are rising, that argument gets in trouble. it's like saying when the music is playing, you've got to dance. we know how that ended. >> not well. >> when you put money into investments, take one of the extreme examples, the austrian 100 year bond. in europe the rates are negative this at its peak this year was up 75% year to date. this is not a nonmeat burger alternative company. so if you're buying this when it's at plus 70% year to date, 75% year to date -- >> who's collecting on that bond >> i don't know how you come out of that okay. >> you made a conscious decision to go bearish. when was it -- >> late august. >> seven, eight months. >> late august >> you have been on many times and going all the way back to your days at the richest company -- >> rich?
7:11 am
>> yeah. and so you got bearish in august and that's stayed steadfastly bearish since august >> what changed for me in august was late august, early september you had the inversions of not just the yield curve in the united states, you had ten yield curves around the world. the highest number of yield curves we've seen since 2009 >> you still think there is a recession, better than average risk or recession on the horizon in the next 12 to 18 months? >> once the main part inverts, the data tells you on average 20 months before the next recession. >> you must believe that there's a head fake in the recovery we're seeing globally in some of these other markets that were weak we are seeing signs that maybe europe is recovering and maybe china is coming back. >> if you look at -- >> you see your thesis. >> if you look at the data and you look at the last five recessions we've had, the last -- going back to the last five inversions of the yield curve. if you look at the data yield inverts, may of '06, 1988, et
7:12 am
cetera, if you look at the point in which the curve inverts, what you find is the data actually will normally improve before the recession. if you look at initial jobless claims, industrial productions. >> when will you know? when will you know >> when unemployment turns higher. >> when will you know if you're wrong that it's not going to happen >> historically the data will continue to improve until you start seeing the turn in -- >> we know we'll have one in our lifetime. >> yeah. >> when will you decide that you were early >> the average is 20 months. i think the question we have to ask ourselves is does it happen before 20 months or after? the longest lag in the inversion yield curve is 20 months that was the early call. the shortest is 13. >> tough to say we won't have a slowdown in the next three years. how long is the cycle now? >> 11 years. >> joe, thank you for coming in today. >> thanks. >> we don't want a recession, do we >> there's opportunity be at this in recession. the question is recession or correction
7:13 am
that would be my question. >> yeah, we don't know >> all right thank you. >> 28 what -- >> 28.75. >> we can round to 2900. >> which is almost ,000. >> i'm going, zidle is at 2800. >> round down. >> the season premiere of a new show on cnbc featuring none other than our guest host, alex rodriguez "back in the game. we'll get a preview after this break. later, stocks disclosing the damage from its bets on uber and wework "squawk box" will be right back. here, it all starts with a simple...
7:14 am
7:15 am
hello! -hi! how can i help? a data plan for everyone. everyone? everyone. let's send to everyone! [ camera clicking ] wifi up there? -ahhh. sure, why not? how'd he get out?! a camera might figure it out. that was easy! glad i could help. at xfinity, we're here to make life simple. easy. awesome. so come ask, shop, discover at your xfinity store today.
7:16 am
today's guest host has a new series, "back in the game. here on cnbc in "back in the game" alex helps ex-athletes and entertainers regain their financial footing here he is with former heavy weight champ evander holifield. >> tell me a little bit more about your house. >> my house was 54,000 square feet i paid for it in cash. >> you paid for it in cash. >> how much was that >> it cost me 20 million.
7:17 am
>> evander spent a big chunk of his fortune building this massive home by the time he moved in his finances were so compromised he couldn't even afford the upkeep. gardening, the pool, bowling alley, electricity, phone bills. it takes about a million dollars a year to maintain his house now that's a lot of money. >> champ, what are you doing for income >> personal appearance. >> any idea how much you're bringing in? >> 20,000. >> what else you're trying to promote fights? >> i'm a promoter, boxing promoter. >> what's that company called? >> real deal promotion they put him out. >> someone taking money? >> why you always have to ask me that that's what usually happens. now they've relaunched we've got new people we trying to get it back right when you don't have others looking out for you, everybody taking something for themselves. they just stealing, stealing
7:18 am
>> seems that you trusted the wrong people >> i couldn't be struck immediately, alex, it's not always going to be about the revenue side of the equation, it's going to be about the cost side that must be hard to tell people that you just can't live like this. >> definitely. >> what are his options for the revenue side at this point >> you know, a lot of times it's not the revenue. we knew we got the revenue right. he made over $250 million. it's the people, the process. >> what can he do now to generate >> one thing about evander we walked all around the city. the people in new york spoke he is beloved. >> so well known. >> so famous trusted. he's got a great brand instead of doing a fire extinguisher, really get his brand that is still pretty solid and genuine. in today's world you win by being truthful and genuine he's both. so we got him into some protein, back into gnc and get him where his super power and his brand
7:19 am
can actually bring value. >> how about the expense side of the equation how do you restructure all of his -- the way he's living right now, his whole situation i would think you need to look at. >> his people, his process and economic alignment there was none there i brought in my buddy marcus lemonis, my high school buddy. tell us, champ, who manages your money. he did not know the name he had to look in his phone. oh, it's george. but he couldn't remember who he fought when he was 12 years old, who was his trainer, who was his nutrition. first, last name i said, we have to get you to know george better who is george, by the way? >> alex, one of the things that has always impressed me about you is you became a millionaire when you were a teenager how did you figure this out so quickly and so early you may not have made every step right along the way, but i remember talking to you over 11 years ago when you were a massive real estate investor
7:20 am
you'd rather be on the cover of "fortune" than "sports illustrated. you've known this for decades. you've had a goal and plan in mind. >> i learned by making a lot of mistakes i learned because i was taken out of westminster christian in miami as a 17-year-old i've had a lot of time to practice average time is 5 1/2 years. i played for 25 years. less than 5% of our 750 players have a college degree. i'm not joe over here, but i was short the stock. one of the greatest competitive advantages we have as athletes is we make a lot of money early. who is the warren buffet, mark lazry in your town and go dollar for dollar and take a 10 or 20-year ride you can miss on these people you need a championship. you need andy pettitte, mariana rivera you need the warren buffets in your community to help you out.
7:21 am
>> one thing that strikes me is a lot of the lessons from this can be applied to normal people, too. >> absolutely. >> the idea of getting your house in order personal finance is not something we teach in high school it's not something we teach in college and i wouldn't say it's something that the american public in general is very well trained in. >> there's two polarizing subjects when you go to a cocktail, when you talk to friends that people get shy about. >> politics. >> and money. >> and financial literacy. you see people shrink in both sometimes. financial literacy, it takes practice it takes discipline. the one thing about athletes and entertainers, they have potential to be great business people, but you have to work at it i work so much harder at my business than i did at baseball because i don't have a competitive advantage. i'm going up against really, really smart people with great teams and my competitive advantage is my team has to be at an institutional level and has to do -- walk the walk every day. >> talk about -- you've got --
7:22 am
you had evander. how many shows have you done >> i've done one with joe smith and then four in the season. >> four in the season? who else are we allowed to talk about it? >> sure. sure we have brian. >> off camera. brian dunkleman. >> explain to people. >> that's the problem. the first year of "american idol" there were two guys, ryan seacrest and brian dunkleman who we don't really talk about anymore. he did something we know about ryan seacrest who's everywhere. >> on his way to being a billionaire. >> i have no doubts and he's on with kelly ripa among a million other things he's doing and brian dunkleman. you don't think of him as an athlete. taking advantage of him, blew all his money, but it's a fall from a pretty high level to where he'd like some type of redemption, i guess.
7:23 am
>> a lot of times warren buffet says you can throw 30% of your equity out the door and you have plenty to succeed. it's not that ryan is so much smarter than brian, it's just making decisions real time and ryan obviously made the right decisions. >> i guess so. all right. we're going to find out who else and i don't think you would ever run out of people? >> the phone is now ringing off the hook because they know we're trying to do the right things and we're getting them back in the game. >> with evander, finding these revenue potential places for him, straightening up his brand, it's a great service. >> he's excited. he's re-energized and having fun. >> alex is with us for the rest of the hour. his new series, back in the game premiers tonight on cnbc at 10 p.m. eastern and pacific that's a good picture. whoa can't look like that no matter what but i don't want to. i'm fine good about myself. sort of, not really.
7:24 am
>> want me to get you out of this >> get me out of this. >> softbank's $9 billion hit, what it means for the vision fund and its investments, too. check out the futures to see that the dow futures are indicated up by 25 points. s&p up by 3. the nasdaq up by 7 these are building on what were record highs yesterday stick around "squawk box" will be right back. coach saban, how is aflac's program different from health insurance? well aflac gives you money directly, for things health insurance doesn't cover. aflac! we put together a little highlight reel for you. here's aflac helping you with your deductible... copays...out of pocket costs. you look good paying bills. get to know us at aflac.com
7:25 am
to take care of yourself. but nature's bounty has innovative ways to help you maintain balance and help keep you active and well-rested. because hey, tomorrow's coming up fast. nature's bounty. because you're better off healthy.
7:26 am
nature's bounty. dana-farber cancer institute discovered the pd-l1 pathway. pd-l1. they changed how the world fights cancer. blocking the pd-l1 protein, lets the immune system attack, attack, attack cancer. pd-l1 transformed, revolutionized, immunotherapy. pd-l1 saved my life. saved my life. saved my life. what we do here at dana-faber, changes lives everywhere. everywhere. everywhere. everywhere. everywhere.
7:27 am
♪ ♪ now the answer to today's aflac trivia question. on this day, this nbc show made its debut in 1947. which show was it? the answer, "meet the press. let's take a look at just a couple of stocks to watch this morning. michael koors parent capri holding had adjusted profits at 1.16 a share they were down 8% from a year ago. the company pointed to higher
7:28 am
expenses with the protests in hopping congress health insurer humana earned 5.03 cents beating the estimate of $4.58 they raised the full year forecast citing strength in the medicare advantage business. when we return, big tech under fire and softbank's $9 billion loss "squawk box" will be right back. make fitness routine with pure protein. high protein. low sugar. tastes great! high protein. low sugar. so good! high protein. low sugar. mmmm, birthday cake! pure protein. the best combination for every fitness routine. oh, wow. you two are going to have such a great trip. thanks to you, we will. this is why voya helps reach today's goals... ...all while helping you to and through retirement.
7:29 am
can you help with these? we're more of the plan, invest and protect kind of help... voya. helping you to and through retirement. ♪ i can shine. ♪ i'mma do what i'm made to do. ♪ built for excellence. you start from the foundation up. the excellence is reaching dreams and chasing them at the same time.
7:30 am
the excellence is reaching dreams and here, hello! starts with -hi!mple... how can i help? a data plan for everyone. everyone? everyone. let's send to everyone! [ camera clicking ] wifi up there? -ahhh. sure, why not? how'd he get out?! a camera might figure it out. that was easy!
7:31 am
glad i could help. at xfinity, we're here to make life simple. easy. awesome. so come ask, shop, discover at your xfinity store today. welcome back to "squawk box. we are live from the nasdaq market side. we're going to be hearing from andrew live from the dealbook conference in just a little bit. he has a huge lineup we've got a pretty good lineup with us. in studio this morning we have baseball legend turned businessman, alex rodriguez. he's the founder of a-rod corporation and his new series premiers here tonight on cnbc called "back in the game." we're talking about it it's a fascinating show. you do not want to miss it tonight at 10 p.m. eastern time, both eastern and pacific times. in the meantime, take a look at the futures after closing at record levels yesterday. all three of the major averages are indicated up once again this
7:32 am
morning. dow futures look like they'll open up another 23 points. s&p up by 2 points and nasdaq up by 3 1/2 softbank reporting the first quarterly loss including a nearly $9 billion hit at the vision fund. they didn't release a forecast for the current business year. there are too many uncertain factors. here's the ceomasa son. >> translator: this time earnings result is not good at all, it's a big negative. masa >> translator: this time earnings result is not good at all, it's a big negative three-quarters result is negative look at this picture we are actually in the rough sea. >> joining us to talk more about this is dan primack, business editor at axios and a global
7:33 am
business columnist at the financial times. her new book is called "don't be evil, how big tech betrayed its founding principles aals and alf us." we knew the numbers were going to be bad. masa son addressed it head on. how for giving do you think his investors will be since this is the first time they've lost money. what do you think, dan >> some will be for giving the bigger question is vision fund 2 masa talked about it we're on schedule, going to start it he had no numbers. in july he said he had $100 billion in commitments those weren't commitments. the enormous funds propping up valuations that i think are completely inflated.
7:34 am
wework, uber, these companies have a business model that i think is not sustainable anymore. they don't want to see a market grab they want to see companies that make money. >> right selling that to the public markets is a big issue to try to get your head around they were able to get the growth off and never having to turn a profit because they were in the private markets. is this just a day of reckoning. are you seeing changes happening at the vc level? >> in the last ten years tech led the markets up i think they're going to lead them down. the bloated funds, companies that come in, it's growth at all cost but no profits, i think we're at a tipping point trade wars, couple of bad jobs numbers and that whole house of cards is going to begin to fall, i think. >> anything you think will be done with disciplined governance in some of these companies. >> no. >> exactly in a word, no >> why >> why
7:35 am
because for starters, okay, say you're an entrepreneur, and softbank comes to you. masa says we insist on governance wait a minute, the last time you insisted on governance afterwards was wework and you kicked out the ceo if i don't need to take your money, why do i take the risk? >> they are not going to be making risks like wework. >> they're trying to raise $100 billion. >> they're not they're going to be more careful with their money my guest is other venture capitalists are, too it can't be a freewheeling basis. >> people are still starting big funds in the valley. i am amazed at this. funny enough, something i covered in my book i worked in tech in 1999 i saw the last bubble. this feels so similar to me. >> alex, i know it's not your big area, you're real estate and you look at markets and different things, but you also must get offered deals from time to time. early on, early investor deals and things like that have you seen any sort of the froth that kind of builds up
7:36 am
does it make you weary >> oh, yeah, it makes me very scared we've been very fearful for a while in venture fundamentally i'm a real estate guy. i like noy and ebitda. if i can buy five times ebitda and grow that over time, i have several ways of winning, both in multiple of sale and growth in the company. we can take that cash flow and reinvest it in what we really know. >> don't you think jeff bezos spoiled everyone >> not jeff bezos. >> i bring that up you wait around, no profits, you get to $800 billion market cap. >> you don't make the losses that they were making either. >> but that's what people -- what they say, let's grow revenue, let's grow revenue. build out the warehouses very few amazons around. >> very few amazons. he could have taken profits at any time amazon is singular. >> it is singular. >> it's interesting, the real estate connection. wework is bringing down property
7:37 am
prices now in new york, london there's this connection between these companies that you think are over here and the rest of the economy. >> becky, to your governance point, the other version is zuckerberg and facebook. when facebook was private yahoo wanted to buy facebook they wanted yahoo to buy facebook he had control of the company and said no. that was a big selling point for him. a lot of founders still look at that and say, wait a minute, if we give the venture capitalists control and somebody comes with a good offer, they're done we want to be facebook. >> you have to find the right ceo. >> and masa son was seen as the person who trusted his gut and knew what was going. is that mystique gone? >> remember, masa is the most interesting investor, quote, in the valley in the sense that he had huge money, did great in the dotcom boom. lost almost everything instead of going back into his cave like most investors would do, he came back over the top chasing risk the most. maybe he can pull this trick again. >> dan, let me ask you
7:38 am
companies are staying private longer there's so much capital out there, so much appetite for risk is that a good thing or a bad thing? >> i think it's a bad thing. bad for the markets. take the amazon example. the public were the ones that got to recognize returns there's a place to go. one of the problems with a company like uber arguably is the private markets got all the value. once the ipo came, there was no pop left. >> 100%. it's interesting in some ways it increases inequality you have a tiny group of investors being able to take all the value in these companies i think that the debt bubble that is reflected in tech right now is broader than tech i think that, you know, you look out record amounts of corporate debt i don't think masa son, i don't think softbank would have been possible without qe. >> in a zero interest rate world you're surprised >> debt, risk, that's what you
7:39 am
get. >> not marked at market. >> softbank kept leading. >> but they're not like normal you can't do a market check on that you wonder, we've always asked every fed head where's the malinvestment. how do you know there's not some come uppance bernanke didn't see it >> you're starting to see it in the weird places, repo market, a lot of distortions we don't know where they're going to come from but are they there? >> they are. >> we need to be worried. >> i'm very midwestern about debt i'm an anti-debt person. >> are you from the midwest? >> rural indiana we don't do debt. >> where >> frankfurt, indiana. are you a midwestern girl? >> born in indiana >> where >> midway between chicago and indianapolis >> what town did you say >> frankfurt. >> my dad's from rochester, not far from there. >> cincinnati. >> right
7:40 am
>> hard working midwesterners do well in new york you're so not. >> you have the untuck it. >> you don't even have a jacket on. >> don't wear a jacket. >> you want to show respect. >> dan, thanks for coming in rana, great to see you. coming up, a-rod talks real estate andrew's not here. a-rod talks investing in his portfolio and the mets new manager. later we're going to hear from andrew, the afore mentioned star of the show, at the dealbook conference today a preview of some very big interviews that he has coming up, including boeing's dennis muilenburg and chris jenner. "squawk box" will be right back. is the fund built to sell or built to last? etfs are only part of a portfolio. so make it easy to explain. give me a quality fund that helps me get clients closer to their goals. flexshares etfs are designed and managed around investor objectives.
7:41 am
so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully. whether your beauty routine is 3or 57,... make nature's bounty hair skin and nails step one. it's the number one brand uniquely formulated for silky hair, glowing skin and healthy nails. nature's bounty, because you're better off healthy. you should be mad your neighbor always wants to hang out. and you should be mad your smart fridge is unnecessarily complicated. make ice. making ice. but you're not mad because you have e*trade which isn't complicated. their tools make trading quicker and simpler so you can take on the markets with confidence. don't get mad get e*trade and start trading commission free today.
7:42 am
7:43 am
7:44 am
>> the economy in this market. to get i'm still bullish long term >> the luxury it looks healthy if you're buying it. the recourse for debt.
7:45 am
>> the local teams >> they've reacted to the yankees, they had a great season i get very angry, very quickly when they don't win every year is it worth it >> there's no greater city to play for the yankees the first time since the 1920s have not made a world series in a full decade. >> i'm sorry, ima from cincinnati the expectation. >> my teammate, carlos, i've been mentoring him since he was
7:46 am
19 years old when he walked into the league he got my agent, my business manager. he literally followed you wilal way. now he's a great teacher of mine how the world turns. you're talking about a very, very wealthy man, good investor, philanthropist he lives here with his wife, jessica. he's the perfect guy he knows new york and he's a world champion. >> trying to get one more thing in because i think it is going to change the way sports is viewed we know that you can't dvr sports it's always going to be great for advertisers. if people start getting engaged with small bits of gambling, fan duel, draft kings, have you done anything i bet on nine college games. i -- >> you move to cincinnati, you and pete rose. we have a street named pete rose way in cincinnati was anyone -- did anyone hustle more than him? >> one of the greatest players of all time.
7:47 am
i love pete. he became a very good friend. >> he's whacky i like watching him on tv. anything can happen. >> joe, he's a baseball -- >> like me. >> baseball savante. he has the memory of a hedge fund trader. he does not remember -- he does not forget an at-bat, a pitch, a sequence i love the guy >> what about everything being marked up, kings being marked up, all valuations being marked up based on legalized gambling >> if you can buy an nfl team, even if it's expensive, i like it the model is really, really good without the guaranteed contracts. people are paying big money for these teams. they don't generate a lot of money. when you buy a team you try to lose or make $5 million, take some pain, put it over 15 or 20 years you should do well jerry's done well. >> fan engagement just goes up a lot and i don't know how many states are going to finally do this i don't know whether there's a
7:48 am
down side. >> you see where fantasy football has changed the nfl there's so much interest. >> baseball is the ultimate gambling sport you can gamble on every pitch. 300, 400 pitches per game. >> a lot of games, too >> it's like low interest rates. at what point do you want to sell your soul out there, right? >> we might be able to have, you know, a lot more back in the game episodes about people who lose all their money gambling that you can try to help that's the one down side to this. >> absolutely. >> you have to be careful. small amounts. but the engagement, every play i'm in on that >> is the blowout you're still paying attention >> that just makes me mad that i'm so stupid to bet on the crappy team. >> gambling football or baseball >> i haven't done baseball yet because it was recent. draft kings -- >> just signed up. >> two or three months ago and i put in $500, i'm at 400 and i'm kicking ass. >> okay. >> i've been down, i've been up. >> lost 20% of his investment. >> thank you we'll be watching tonight at 10,
7:49 am
"back in the game. looks really good. coming up, wall street -- we didn't get to ask you about wealth taxes and elizabeth warren. >> next time. >> frank luntz is going to join us we'll be right back. dodged it. ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪
7:50 am
here, hello! starts with -hi!mple... how can i help? a data plan for everyone. everyone? everyone. let's send to everyone! [ camera clicking ] wifi up there? -ahhh. sure, why not?
7:51 am
how'd he get out?! a camera might figure it out. that was easy! glad i could help. at xfinity, we're here to make life simple. easy. awesome. so come ask, shop, discover at your xfinity store today. i spent two years alone and homeless. announcer: as america's veterans face challenges, dav is there. man #1: my victory was finding the support to get back on my feet. announcer: dav helps veterans of every generation get the benefits they've earned. man #2: i'm a veteran. when i got out, i felt like nowhere was safe. announcer: so veterans can reach victories great and small. man #2: my victory was finding the help i needed. announcer: support more victories for veterans. go to dav.org here on cnbc some of the most powerful business leaders
7:52 am
running throughout the day what an elizabeth warren presidency would mean for the markets and corporate america. here are a couple responses from very well known names on wall street >> our poll said if elizabeth warren was elected the s&p would trade around 2250. i think it's at 3050 now but i'm just saying her policies probably would, assuming that they're implemented, probably would give you something like that. >> she uses some pretty harsh words, some would say vilify successful people. i don't like vilifying anybody i think we should applaud successful people. a lot of people come to the company for opportunity, choice, success. we want that for everybody that's a little bit different than paying your fair share, how the taxation system should work. that i completely understand i think we have to look at america was founded on free enterprise freedom and free enterprise are interchangeable. you can't separate them from each other.
7:53 am
>> senator warren hitting back after that interview tweeting this jamie dimon and his buddies are successful in part because of the opportunities, work force and public services that we all paid for it's only fair that he and his billionaire friends chip in to make sure everyone else has a chance to succeed. here to discuss this and warren's chances of winning, pollster and political strategist frank luntz she's learning maybe not to completely vilify everything i'll just bring up one from a few years ago, bono, the great singer in youtube said in certain parts of the world you look up on the hill and see the rich guy in his house and you say, i'm going to get that guy when you are coming to the united states you look up at that guy in the you states you say, i want to be that guy is that changing >> it is changing. we are in a culture of punishing success because we feel they made it through ill-gotten gains. let me give you a couple of
7:54 am
statistics right now capitalism is only 15 points above socialism in terms of what the american people would prefer their economic system. >> at what basis, 15 points. what versus what >> 57% choose capitalism, 47% choose socialism among the next generation, millennials, it's 2 to 1 socialism versus capitalism. we are not teaching our kids well if you change capitalism's economic freedom, it's the word, not the term if you change it, it's 2 to 1 economic freedom over socialism. the problem is the ceos, corporate america are not using the -- >> tainted word. >> they talk about profits when the public is prepared to pay for performance. these are simple changes of language second, is the american people feel that there should be a safety net now this is a change over the last 20 years that they believe that those who are poor or working class deserve to be raised up. the difference where elizabeth
7:55 am
warren is wrong is they don't want to take the top down. and that's very great frustration. >> we have a social safety net they want a better one. >> they don't think it works that's part of the frustration with washington. you're sending all your money to d.c. the public thinks the rich don't pay their fair share and the poor are taking benefits they don't deserve. that is the key question for me. which is the higher priority making sure the rich pay their fair share -- >> what happens? everybody becomes a millennial and the numbers for socialism go up or millennials timely learn something about the way the world actually works and they turn into what for lack of a better word, what the people that are older than them -- >> i don't believe millennials are going to learn >> i think the school systems have failed us. >> we did in the '70s. >> it's one of the responsibilities of corporate america to go into public education, to teach economics to 11th and 12th graders, to teach civics to 11th and 12th graders
7:56 am
and it's not happening right now. we have no one but ourselves to blame. those students who learn history, government, economics are much more born to believe in this. >> i don't know that we're teaching economics less than we used to. >> we are. >> it may be these are kids that grew up during the great recession, they watched what happened to their parents, they watched the promises that were made get yanked out from under them and now they don't believe it. >> that's part of it don't make promises you can't keep don't offer people pie in the sky and that's exactly what medicare for all is about to do. it's about to say to everyone, you get everything you want. you get your prescription drugs. meet with your doctor. get everything you want and pay nothing. >> it's a lie. >> frank, if you had to belt, you you h bet you'd say elizabeth warren becomes the nominee and she wins. >> she becomes the nominee and we are going to see a fight. >> you think she can win >> i absolutely believe she can win and it's up to your viewers starting right now, one year out. we're exactly a year from the
7:57 am
election to adopt a different tone, different language, a different presentation to defend economic freedom and if they don't, then you are going to see this collapse because the american people, right now a majority of them support medicare for all a majority support a wealth tax. a majority support a 70% highest rate of income tax the economic freedom advocates are losing as of november 5th or 6th, whatever today is and they have one year to fix that. >> frank luntz, something to think about. that's for sure. we do our best, but then i pay the price on twitter anyway, thanks. when we come back, ralph nader on ceo dennis muilenburg's decision to forfeit his bonus at boeing
7:58 am
7:59 am
8:00 am
uber unlocked. a billion plus shares of the ride hailing company about to open up for trading. two potential megadeals to tell you about walgreens looking at going private and xerox mulling a bid for hp. and ralph nader versus boeing the legendary consumer advocate sounds off on the exclusive interview with boeing chair, dave calhoun the final hour of "squawk box" begins right now.
8:01 am
good morning and welcome to "squawk box" here on cnbc. live from the nasdaq market site in times square. i'm joe kernen along with becky quick. andrew ross sorkin is at "the new york times" deal book conference today we're going to be hearing from him shortly about -- we have calhoun yesterday, the chairman. new chairman of boeing andrew has dennis mooieleburg they've turned positive. they've been mixed now the dow is up 25points nasdaq indicated up 5 and the s&p indicated up 2.5 or so that would not be a record in the s&p. i think we lost 3 yesterday, 3 points trading new highs. 183, slowly creeping up. almost 184 on the ten year
8:02 am
you know, it's not far from 2. >> at 185. >> it made a little bit of a stand down there, the numbers that looked so weird and report on them. did we get the -- get to 1.3 we got below 1.5 >> close >> i don't know. also uber shares hitting an all-time low after the company reported another billion dollars in losses. now the post lockup period will free a billion shares for trading. leslie picker joins us with more on that story. >> good morning, becky it's been 6 months since the uber ipo meaning earlier investors required to hold on to their shares are now able to sell them. the question for the market today is whether that puts additional pressure on an already beaten down stock or does it ultimately offer a floor. uber's so-called lockup expiration will free up more than $1.5 billion shares or 88% of those outstanding not everyone will sell but
8:03 am
analysts are concerned it could weigh on a stock that as you just mentioned hit a record low yesterday and is falling premarket today. there may already be a group of willing sellers. uber's earlier investors including soft bank and benchmark were planning on selling 27 million shares in the ipo as part of the so-called over allotment agreement in part because the stock price never sustained levels below the ipo price. it was never triggered and the investors may choose to sell now. now that said, about 1/3 of uber stock purchase privately is currently underwater according to calculations by our colleagues at cnbc.com those investors may choose to hold on a bit longer with the hope of it going higher from here now the weakness is not just limited to uber. other recent ipos like lyft, slack, smiledirectclub each down 40% from the highs peloton trading about 20% from its high >> leslie.
8:04 am
thank you. let's continue the conversation. stay here with us. we're going to bring in our next guest now, mike volpe. general partner at index futures. he was formerly at cisco you've been watching what's been happening for quite a while in silicon valley, the private markets. does this come as a shock to you to watch some of these ipos perform as poorly as they have since they became public >> not entirely. some of these stocks, some of these companies traded pretty quickly to stratospheric they have a bit of a hard time understanding what they look like after they mature and after they've been road tested on ipos for a couple of quarters so the market has brought them back if you actually look at the multiples of these companies, they're still quite rich or at least reasonable so i'd say no surprise that they've come back down. >> valuations based on what? many don't have earnings. >> multiples around comparables.
8:05 am
you are seeing reasonably rich multiples or fair multiples. it's not a surprise some have come back down to earth a little bit. >> it seems to me that, look, it's not a surprise to see the valuations take off in the private markets. what has been abrupt is the public market's refusal to go along with that party. does that come as a surprise to people in the valley >> i would say to some, maybe. public markets are very rational they look at the fundamentals of the business, income statements, balance sheets, p&ls and will evaluate what the company is worth at least over a period of time our job as private investors is to invest on a business, strategy, a dream. it's sort of like investing in a college athlete when you don't
8:06 am
know how they're going to perform in the pros. sometimes you get it right and you get it cheap and it's going to do great and sometimes you get it a little bit wrong. they don't perform to the potential you thought they had. >> although i still hear you talking about valuations and using those valuations in terms of revenue and not earnings and that may be a reckoning where the public markets just aren't going to support it to that extent forget about it. i don't think these companies haven't performed to the way they're supposed to. in their prospectuses they might never see a road to profit we might never make a road to profit to this point, in hindsight it looks like they've been coddled to say yes you don't have to worry about profitability. >> i have no argument there. i think that's right i do think there are some of those companies that have shown high degrees of cash consumption discipline when they were private and as they've become public they've performed well. you look at a data dog, you look at an elastic, both of our
8:07 am
companies have done well in the public markets companies that don't have a prospect of producing earnings are going to at some point struggle that's what you're seeing at uber, potentially at lyft and that's what -- at the end of the day that's what wework showed. >> do you think psychologically as the lockup expirations start unfolding for all of the ipos that took place in the first half of the year, psychologically for the companies that are underwater, does it make people more inclined to sell or less inclined to sell into the lockup expiration >> that's a super tricky thing to say i think it very much depends on the circumstances of the shareholder. if they invested super early let's imagine they were series a or series b, the gain they've made is so substantial whether the stock is up or down that there may be an incentive to take stock off the table if you have investors that showed up when they were 40, 50 billion, they might have a psychological effect they might say i'm going to hang
8:08 am
in there a little longer. >> bradley tesk was with us earlier. he was a very early investor for uber he was an investor for travis kalanick employees have been rich on paper but they haven't had access to ways to get some of the money out a couple of years ago softbank bought some of it he made the point some may very likely sell today just because you've got to make good on some of that. by the way, a lot of them were granted those things they're underwater they're just not as rich as they thought they were. >> the employee base will probably sell some i doubt that's going to have a deep, deep impact on the stock price. i think it's the institutional investors will have more of an impact private investors won't sell the minute the lockup comes off. there will be a little bit more of a tail there. the risk will be early stage institutional investors have a 10, 20, 30 times gain on the original investment they made. they'll say, look, i'm going to
8:09 am
take my money off the table. i've made more than i expected. >> are they safer to invest than three months from now when that has cleared and is out of the way? >> a stock like uber is pretty widely traded. there will be short term volatility when it expires i wouldn't expect it to last more than a week see what happens over the next few days thereafter i think it will steady out i think really the big issue for a company like uber is how are they going to get their earnings they're still spending nearly a billion dollars a year on self-driving initiatives if they can cut some of those and look like a profitable company -- >> did you cut your teeth at cisco learning everything that you need with acquisitions there? how many acquisitions did you make >> when i was there, i was 75 or 80. >> that's almost cheating. >> you went out and did it yourself and got these great companies. if you see anything going on now, leslie, right, can you whisper to us something -- >> joe, we run an investment
8:10 am
fund you're welcome to -- >> you're not? >> i'm not >> no. sorry. >> thanks, though. >> pleasure. >> nice meeting you. >> he's on this fancy list do you see this? the top guys out there for venture capital. but it helps if you work at cisco how many years >> i was there for 13 years. >> 13 years. fantastic ride. >> that didn't hurt, right thank you. >> thanks, leslie. >>. "the new york times" dealbook conference is about to begin just a short distance from where we are now i'd head over there if i was allowed, but i was rejected when i applied for a ticket our own andrew ross sorkin joins us now ahead of the big day, guests including boeing's ceo dennis mieleburg you said i would need to know someone to be allowed in there. >> tell mike he's got an invitati invitation he's sitting with me. >> you'd love to have him. >> i was emailing with him a couple of days ago.
8:11 am
>> a-rod just told us you invited him. >> a-rod might stop by. >> well, he should we have a huge day ahead and it is a remarkable group of people. i imagine a lot of news is going to get made today. as you mentioned, dennis muilenburg will be speaking with us all about the topic that you were talking about that's going to be followed by conversation with brian chesky who will be the biggest public listing. a company in the headlines given the deaths last week at an airbnb and then in the afternoon, kris jenner and kim kardashian west we'll talk about influencers we'll talk with the co-founder of instagram and then this afternoon bill gates is going to spend some time with us along with gwyneth paltrow who will talk about goop. we'll have david marcus talking about libra. we'll have a conversation with
8:12 am
reed hastings from netflix in the middle of this streaming war with apple plus just starting its service last week and disney plus next week we'll have our final conversation about the political moment we're in with hillary clinton. it is a full and packed day and i know we're going to bring it to you, so much of it live on the air throughout the day, guys. >> you're going to sleep well tonight. you know what i mean >> i hope so i hope so. >> isn't your mind mush after -- i can't imagine all of that. >> my anxiety and my mind might be mushed right now. >> both. no, but it always works out, andrew >> done this before. >> it's excitement, not anxiety. but i just -- >> you don't know. on the go. >> i know for myself i would be exhausted after all of those interviews it's worth it. >> we're looking forward to them it's been a -- it's been a long ride to get to today and i really think we've put together a remarkable group. >> no doubt. >> hopefully we'll get a lot of
8:13 am
news and we'll be talking a lot about it tomorrow. >> did you get to see the calhoun stuff from yesterday to run past muilenburg? >> i did first question out of the gate you don't want to give the questions away but is going to be about that very kirchs that dennis muilenburg had with david calhoun and david calhoun relating it to phil lebeau yesterday. we want to get it from the horse's mouth and hear what he was thinking, why, where this is all headed next. >> andrew, we'll be watching thank you. >> thank you. >> have fun. break a leg. >> see you soon. coming up, ralph nader versus boeing. a long-time consumer advocate sounds off about the interview with david calhoun and a cost-benefit analysis on medicare for all john borasso responds to senator elizabeth warren's ambitious proposal is that what we're calling it? okay you're watching "squawk box" on cnbc
8:14 am
woman: what gives me confidence about investment decisions? rigorous fundamental research. with portfolio managers focused on the long term. who look beyond the spreadsheets to understand companies, from breakroom to boardroom. who know the only way to get a 360 view is to go around the world to get it. can i rely on deep research to help make quality investment decisions? with capital group, i can. talk to your advisor or consultant for investment risks and information.
8:15 am
8:16 am
welcome back to "squawk box. walgreens boots alliance is looking to go private.
8:17 am
if the deal goes forward it will be the largest leverage buyout in history shares are down 23% in the past year sources tell reuters that walgreens has spoken with numerous investors about a potential buyout and evercore partners to investigate the viability of a deal. in other possible deals, wall street journal says hp is the target of a potential takeover by xerox, a much smaller company. the xerox board is said to have discussed the possible stock and cash offer for hp yesterday. we're going to speak to the author of that wall street journal article in a couple of minutes. another drugstore stock making news this morning. cvs health beats the top and bottom line. the company got an assist from strong results at its pharmacy benefit management unit and its aetna health insurance business. still to come this morning, crucial third quarter productivity data. that's on the way in a few minutes. we'll be right back.
8:18 am
still to come, taking on an aerospace giant. yesterday "squawk box" spoke excludsively with chairman dave calhoun. today ralph nader responds we'll ask him if boeing is doing enough to improve itself and whether ceo dennis muilenburg can still effectively lead the company. u' wchg quk x" yoreatin"sawbo on cnbc bsolete? at pgim, we see alpha in the trends driving specific sectors of outperformance. where a rising middle class powers a booming auto industry... a leap into the digital era draws youthful populations to mobile banking and e-commerce... trade and travel surge between emerging markets. every day, our 1,100 investment professionals around the world search out opportunities for alpha. partner with pgim, the global investment management businesses of prudential. as a principal i can tell you this. when one student gets left behind, we all get left behind.
8:19 am
this is a problem that affects each and every one of us. together with ibm, we created a whole new kind of school called p-tech. within six years, students can graduate with a high school diploma, a college degree, and a pathway to a competitive job. you know what's going up today? my poster. today, there are more than a hundred thousand p-tech students around the world. it's a game changer.
8:20 am
8:21 am
welcome back to "squawk box. watching futures this morning. right now it is green arrows across the board dow futures indicated by 21. the nasdaq up by 4 the s&p up by 2. s&p was down 3 yesterday so we're not back to a new record. >> almost there. >> dow futures would indicate another high for the dow. >> which hasn't moved as much recently at least. the s&p hit the new highs first. >> right. >> confirmed by the -- >> dow. >> industrials yesterday on "squawk box" boeing's chairman said the company's board believes ceo dennis muilenburg has done everything right since the loss of the two 737 max plains. chairman dave calhoun said muilenburg suggested he take a pay cut. >> dennis called me saturday morning, 10:00, with the purpose of suggesting that he not take any compensation for 2019 in the
8:22 am
form of bonuses which is, of course, most of your compensation it came in two fronts. one, no long-term bonus and, three, no consideration for equity grants until the max in its entirety is back in the air and flying safely. as you know, max in its entirety takes us through all of the next calendar year. >> joining us now on squawk line for reaction to our interview, consumer advocate ralph nader who lost his grand niece in the ethiopian air crash. mr. nader, it's great to have you on again and usually we have some good luck with our phone connection hopefully that will be the case again. let me start by just asking you, chairman dave calhoun made the point that it would be tough to change ceos right now because of, a, i guess mr. muilenburg's
8:23 am
knowledge of everything that's happened and what needs to be done to get the plane back in the air and because he's an aerospace engineer and, you know, that might be helpful in terms of some of the decisions being made do you think that mr. muilenburg is the right person to get this done, ralph? >> no, of course not, joe. he was deep in the decision making that led to the deaths of 346 people in indonesia and ethiopia number one second, i think some members of congress who demanded he resign made the right point he's too implicated. he's already refusing to support any legislation. he took a pass on that during the hearings he's refusing to require simulator training as captain sullenberger said before the house in june for the pilots with this new so-called revised
8:24 am
software fix for a hardware defect he won't recognize that the problem started with the larger engines over a lower fuselage, 50-year-old fuselage that increased the proneness to stalling by the 737 max. he hasn't changed anything and he's repressed a lot of dissent, technical dissent he's a charter member of the boeing marketeers who overruled the boeing engineers and david calhoun, he's been there since 2009 the board is heavily private venture capital people plus some trophy candidates on the board, former ambassadors no, the whole system at the top of boeing is now not good for the future of boeing because they can't admit that they have to change things fundamentally and that the faa needs stronger
8:25 am
budgets, stronger regulatory authority for the traveling public and greater technical staff so he's blocking that as well they're continuing to give campaign cash to over 300 members of congress, including the key transportation committees it's not a good scene. you need a new team. people in the faa need to be fired, too, especially elwell and elbaharami they were in on this whole massive delegation or abdication of certification authority to the boeing people. >> if you were -- if we made you chairman of the board of boeing right now, ralph, would you want to get the 737 max back into the air? what would you need to feel comfortable to try to recertify that what would you want done if you were running today would you want it to go back in the air? are you pulling for boeing eventually to get the planes back up and manufacture and go
8:26 am
back to business as usual? >> there are about 400 of these planes in the hands of airlines domestic and foreign there are 5,000 orders so you don't want to go in the wrong direction here and put up a flawed plane what boeing should do number one make available the technical issues there's a new flyer's rights by paul hudson, flyersrights.org on the 737 max debacle. very specific recommendations that boeing and the faa in the next ten days must release the technical details of boeing's proposed fixes to outside experts and the public for review and critique with a 60-day public comment period if they want to get rea shurps, boeing, that is, they better put
8:27 am
this stuff out, not try and do it in secret the second thing is they have to fix with the larger engines over a lower fuselage that increased the prone to stall problem of the 737 max which led to the crashes. and in the 737 300, the old faa said to boeing, you've got a problem, boeing. you've got to fix the airframe today the faa is not saying, you've got a problem with the airframe and the overloaded engines and you've got to fix it, they're trying to fix it with a flawed, complicated software called mcas. >> we all want to get to the same place your view and others and, you know, maybe everything will end up improved. ralph nader, we appreciate your
8:28 am
time thank you. >> thank you when we return we have breaking economic news. latest productivity numbers out in a few minutes we'll be right back. do you have concerns about mild memory loss related to aging? prevagen is the number one pharmacist-recommended memory support brand. you can find it in the vitamin aisle in stores everywhere. prevagen. healthier brain. better life.
8:29 am
you still have service? call the insurance company sfx: [phone ringing] it's them, calling us. it's going to be a week before they can get through on these roads shhh, sorry, i didn't catch that. i said ask how soon they can be here right now? what's now? he says they're surveying our property now they're probably at the wrong house i don't see any hovering his name is hovering? look up? by automating claims with machine learning and analytics, cognizant is helping insurance companies advance how they serve even hard to reach customers. cool ♪
8:30 am
welcome back to "squawk box. rick santelli here live in the florida cme group. breaking news. unit labor costs expected to be up close, close to 1%. a miss here, down .3 on nonfarm
8:31 am
productivity up 3.6 on unit labor costs and that down .3 on productivity is very unusual to get a negative number on productivity. granted, it's a preliminary number this is not only the weakest number since december 15, it's the first negative number since december of '15 and it happened to have been a big one back then minus 3.5 but the comp is the comp and unit labor costs, of course, moving higher makes sense in a lower productivity environment. there was a revision to the final read on last quarter which is much better than expected really it now stands at 2.5 and labor costs moderated from 2.6 to 2.4. listen, without the magic fairy dust of productivity, many things in the economy never look quite as bright. becky, back to you >> thank you, very much, rick, again. keeping an eye on the futures. we also have a tweet that is
8:32 am
just out from the president. apparently the president tweeting, stock market, all three, hit another all-time and historic high yesterday. you are so lucky to have me as your president just kidding spend your money well. >> tweeted something else out. witch hunts, et cetera, curt volker he said, kidding. >> just kidding in parentheses. >> just kidding. in every guejest there's -- >> senator elizabeth warren has been taking heat on her proposed medicare plan for all that targets the wealthy. that cost is over 10 years some people have put that number lower at $23 trillion. joining us is senator john barrasso of wyoming.
8:33 am
he also spent 26 years in the senate thank you for being here today. >> thank you. >> what do you think of the medicare for all plan? >> well, it's interesting. even the democrats are pushing the panic button over this one it takes health insurance away from 180 million americans who get it from work it's a complete government takeover of health care. they will may more, wait more for it that is the problem with this. she's made promises. i think it's fantasy land. additionally it is dishonest in the way the math is implied. from a doctor taking a look at this, this is not going to work for patience or for providers. >> let's go through the math first because that's been the area that's probably received the most heat. which of the assumptions do you disagree with? which do you think are off base or unachievable? >> well, in terms of what it costs. both the liberals and
8:34 am
conservatives who have looked at this put numbers at about $10 trillion higher than the numbers that she's come up with in terms of taxes and how to pay for it so to me fundamentally that is a big problem. she's undercutting what the costs are going to be. the costs are still greater than what we're paying today for medicare, medicaid and social security there's enough money to do what she's doing. >> 110% is what a lot of hospitals would get paid 110% what they're getting paid for medicare right now proponents of this, those that are mildly supportive of it, say, look, it's the same amount of money being spent in the private sector funnel it into that and medicare, what the states are paying right now, what employers are now paying for them. if you pay the dow they say it's the same amount of money you have to do amnesty for
8:35 am
illegal immigrants so they will pay taxes. let's unleash the irs to crackdown on all-americans to garnish wages, seize property, all in an effort to create it, it's on top of what elizabeth warren ras planned on giving them these taxes are on top of those. >> i think the wealth tax would go i think from 3% to 6% based on some of these things. john, let's talk through some of the issues the reason some of this is getting attention, not even the democrats including joe biden are signing on the reason it's getting so much attention is because health care costs are outstripping inflation again. it's a massive part of our spend. here we are, still unable to get our arms around it the plan makes some assumptions, things like prescription and
8:36 am
pharmacy costs or prescription medical costs they plan to bring down by 70%. they plan to pay doctors less under this plan. they plan to pay hospitals less than they're making now between medicare and the private insurance companies. what does that mean from somebody who's actually been a medical professional practicing in that arena? >> and in wyoming with our rural hospitals and rural hospitals across america, so many of them wouldn't be able to keep the doors open people wouldn't be able to go to their local community hospital for care if that local community hospital closes, becky, you know that makes that harder in that community to recruit businesses, people, businesses, nurses it's a death nell for many communities if a hospital closes they tried this in vermont vermont canceled it because they couldn't afford it they had it on the ballot in colorado and that's a state that is ng bleeding blue. that is a state that defeated it 80-20. in terms of what works at home,
8:37 am
it's very different than what elizabeth warren is trying to put on paper. >> however, there is a huge amount -- i think a lot of polls that i've seen put health care as the number one issue that people are concerned about what are the republicans planning to offer up instead >> first, if you like your health insurance that you get through work, you can keep it. >> that's what president obama told us before obamacare. >> and what we know is that 5 million people lost it i'm saying that elizabeth warren wants to take it away through work if you have a pre-existing condition, republicans will protect your health insurance. we want to get rid of -- eliminate the surprise medical billings we want to lower the cost of prescription drugs and we have done that. we think there should be more transparency people who can shop around if they have the time and there are
8:38 am
price differences, which are about 30% of health care spend, people should know those costs so they can make the decisions about that what elizabeth warren is proposing is going to limit people's ability to get the care that they need from a doctor they choose. i want to help people get that at lower costs. >> senator, i think people like you and i who have health care insurance that we do like and appreciate feel threatened by things like this there are people who don't have health care insurance who have seen prices go up and are very discontented and very concerned about what's going to happen to them are you offering them something more than the status quo >> well, you're offering this and it's going faster than inflation. i want to lower the actual costs of care for people through transparency, through giving people more information, more
8:39 am
competition in the health care marketplace so people can make decisions that are best for them >> senator barrasso, thank you we appreciate your advice not only as a senatorbut a doctor. >> i would say do not be deceived by what elizabeth warren has offered under that plan people will pay much more and they will have to wait longer for worse care. >> thank you, senator. >> thanks. when we come back, the record highs keep on coming. where can you put your money at this point to get in on the rally? stay tuned, "squawk box" is back in just a moment don't forget to subscribe to our podcast. you'll get interviews, original content and behind the scenes access look for us on apple podcasts or on your favorite pcaodst app and subscribe to squawk pod today.
8:40 am
8:41 am
8:42 am
welcome back to "squawk box. futures best levels we've seen, up 40 or so on the dow another new high that put the s&p at a new high it's up at 4 the nasdaq indicated up 10 or so. a new potential deal to tell you about this morning xerox is said to be considering a bid for computer and printer maker hp hp is about three times as large as xerox in terms of market capitalization wall street journal had the exclusive story and is joining us right now the reporter behind that scoop is the journal's carol lombardo.
8:43 am
thanks for being here. >> thanks for having me. >> the two companies grasping on, combining, what's the logic? >> size wise the idea catches everyone by surprise the logic is both companies are at a turning point printed documents, we use a lot fewer than them. printer sales. that's not a fast growing industry the idea is by combining they could cut even more costs boosting their profit margins and be stronger together also they're in slightly different industries so they both make printers but obviously xerox is nope more for the larger copy machines, the ones we have in our offices where hp is known for the small printers, the type we have at home, as well as a huge pc business they could combine forces in terms of diversification. >> does it make sense for you when you hear about two companies that are in cost-cutting modes, a little bit of a panic getting together.
8:44 am
does that play out, do you think? >> that's the type of deal we see where revenue is not quickly growing. bankers have long suspected we may see a printer company merger did they suspect it was xerox making an offer for hp, probably not. >> is there any reason to think the justice department will step in or when you're in an industry that's in trouble, is that kind of glossed over? >> it's certainly a valid question i mean, the fact that xerox has apparently, as we said in this story, found a bank to say that they think they have -- that they have full confidence they could raise the necessary funding for this bid and xerox has thought through the rationale, it leads me to believe they've thought through the antitrust reasons and they see the fact that, one, the declining sales and then, two, the fact that they are in slightly different parts of the industry could be working in their favor there. >> immediate knee jerk reaction
8:45 am
has hp up by 8.5%. xerox down 3.7 the market is saying, yeah, there's something happening nkts that's the market saying that this could make a little sense hp and xerox are two companies in a different spot. xerox as we know has been in cost cutting mode aggressively they posted better than expected earnings last week they announced a deal to sell their joint venture with fujifilm just yesterday. their stock is up 84% so far this year. >> how did they get to be the acquiring company from being so much smaller >> their stock is so much more richly valued. whether that's the deal is still to be seen. >> thank you for coming in. >> thanks for having me. >> how much stock would they use? any idea >> i didn't have any details. >> half and half. >> cash and stock. somewhat of a premium. >> even though it's so much smaller they're able to be creative easier because the
8:46 am
stock is so much more highly valued >> yeah, the cost savings from the deal would make it that they're able to pull something off of that size. >> xerox could use something i feel bad over the years we don't xerox things anymore. we don't call it that. >> i do. >> do you use clean nicks? >> yes, and tissue. >> i hardly know you >> thank you thank you, kara. our next guest -- i do know you. how long has it been >> what about band aids. >> band aids. >> who doesn't have a band aid. >> exactly i'll think of some other ones. barbara's here barbara ryanhart said there's global equity here the record highs in the u.s. she's head of asset allocation at voya investment management. you are suggesting movement out of the u.s you think we get higher highs in the u.s. do you think the relative value
8:47 am
is broad >> well, yes so we think that equity markets are going to be able to march higher over the course of the next three to six months it's really predicated on three things the global policy easement we've seen around the world, and especially in the u.s. with the fed has re-steepened the u.s. yield curve. that's relatively good news. takes some of those recession fears out of the markets the second thing as well is the potential for a trade deal it's anyone's guess at this point, but even just to not continue to escalate the tariffs, which i think is relatively good news, and the third piece of it as well is the slowdown that we've seen in economies outside of the u.s. has been lumbering on for about 18 months. we're starting to see the signs of it stabilizing. we had a trough to global pmis in august. we had three consecutive months of still negative readings but
8:48 am
month over month pleadings it takes about four months of improving pmis globally for the slowdown to, indeed, end it's a contrarian market. >> outperforming economy >> it has been without question. but i would say this when we think about where the expectations are beaten down the most and where there's more potential for up side surprise because of policy stimulus, it goes directly to europe, japan, and the emerging markets. >> i thought it was interesting the way you said the steepening of the yield curve has at least taken away the specter of a recession. so just weird that you had said it so it's appearances matter if people think there may be recession from the flat yield curve they act like there's going to be a recession and bring one on so this what could be a technical move either to
8:49 am
inversion or out of inversion, those things aren't just reflecting the actual fubtd amountals that there will be a recession, they can be part of the self-fulfilling prophecy do you see what i'm saying >> i do. >> there was never a recession now because it was a false signal since we're back to non-inverted >> no. think about this the reason the yield curve has inverted is the ten year has backed up. the nice part about the ten year backing up means global yields have been able to come off of the rock bottom as well. a steepening yield curve is good for financial earnings they are a significant portion of the s&p 500 you need the financials being able to have the supportive environment to be able to deliver eps. >> it can be self-fulfilling >> in other words, flat yield curve, the financials are unable to make any money, they have crappy earnings, the next thing you know stocks go down? i don't know whether that -- >> it's reflexivity.
8:50 am
perceptions matter it was quite bothersome to the financial markets, especially in the month of august when you saw every single curve on the treasury curves going into inversion and it's difficult for the financials to make money in that environment. >> we've been talking about late cycle. three jeers? >> much higher probability of three years. our models go out with the surek about things that cause recessions, very tight labor markets, rising wages, rising inflation -- >> rising interest rates, though we don't see any of those. >> exactly >> and -- >> think about this, the household is in fantastic surpl surplus. savings rate is up, consumers are getting wage gains especially in that bottom quinn
8:51 am
tile of earners. you generally don't have resegs when the household sector. >> everybody points to that, if you need to be bullish about something, it is consumers and households >> if you need to -- if you need a safe harbor to go to, they feel very safe at this point. >> your call to rotate away from this is purely based on relative valuations you still expect us to grow faster than europe, don't you? >> erick tyes, the u.s. is goin grow faster than europe. it is based on expectations. the expectations are so beaten down outside of the u.s. and that's where we see the most potential for upside surprise. think about this, european growth is growing faster than the u.s. they were the first casualty of the trade war. if there is going to be any type of pulling back on the trade war
8:52 am
rhetoric, and even potentially just stopping more tariffs from going into place in december, they would have to have probably the biggest beta that we think is worth it to play. we see it probably outperforming over the course of the next three to six months, especially if you get the dollar going down if you got easy monetary policy, and not easing fiscal policy, that generally means that the dollar goes down. >> okay. barbara, thank you. >> thank you. >> okay. >> we'll see you. >> let's get down to the new york stock exchange. jim cramer is getting ready to gear up and get going with "squawk on the street. let's talk about the two potential deal stories out there today. one would be the story of xerox buying hewlett-packard the other being walgreens boots alliance going private i guess i get it but what do you think of these two potential deals? >> i look at walgreens and wonder what are they thinking?
8:53 am
this is a business that could be undersold. i regard walgreens as almost all front of the store, they got some ready clinic in the back and prescription, but not nearly as integrated as cvs because of aetna. they're nuts if they do it i'm trying to get over, the $8 billion company in xerox trying to buy $27 billion company i find it almost insulting i'll tell you why. dan reeseler is leaving this week dan reeseler did a fantastic job, still couldn't get the stock up as much as he would like, but just because the combination sounds good on paper doesn't mean it makes a lot of sense. i think that hpq was going away from the pure printing and they do have some problems in ink so this is a merger that is to me much to do about nothing. i want to see more on it, maybe david has something on it. maybe trying to get frankly see hewlett-packard to buy them. i'm not putting a lot of cre
8:54 am
credence in either one of these. >> hchl p up by. hp up by 8% today. >> the quarter is going to be not that good. dan reeseler was challenged very much in european printing. the company was trying to go more -- much more 3-d, that's where the future was i met with him many times. it is not where the future is for xerox. so i just think it is something that both these stories seem quizical to me and any company that tried to do these deals would be challenged. challenged meaning i don't know how they pull it off you put a lot of debt on drugstore chain, you get rite aid. you can't invest, you can't expand i think walgreens, they have assets they can sell off there is no reason to do this. no reason. they have to tough it out. they have to be an amazon. you don't beat amazon by loading down the balance sheet with debt. >> you beat amazon by trying to
8:55 am
outamazon amazon >> you make it a healthcare company. when you make a drugstore company a healthcare company, it is hard to compete walgreens will tell you they do it they tried to do it with theranos >> whoops. >> that didn't work out so well. it is important what you're talking about, that people need to pay attention to this before the opening bell today because, again, these stories are out there, the stocks are moving if it doesn't happen, a lot of people who got snookered through. they should be listening up as we get closer to the opening bell. >> just go buy cvs, lisa gill, the stock is a clean $7 per share. you give it a 10 multiple, 11 multiple, and it has got six points all over it i would rather do that one than come in on walgreens i just think walgreens could be
8:56 am
quick. >> what do you think about ub are shauber shares today >> we did a report this morning on brian sullivan's show about how much people are under water. and maybe they wouldn't sell i don't think that's a reason not to sell. that may be a reason to sell >> to get out before you lose more. >> look, the company is committed to losing money. i like companies committed to making money maybe i'm old-fashioned. who is committed to losing money? >> i think that's sane, not old-fashioned. rational >> the commitment to lose money -- look at peloton before they made the commitment to lose money, that stock was flying i don't think these guys understand, you look at a david farr at emerson, he's not committed to losing money. he's committed to making money i want a value stock committed to making money. i don't want a high growth stock committed to losing money. those guys have the wrong impression about what works here what works are companies whose balance sheets are good, they brought back a lot of stock.
8:57 am
not a lot of supply of stock and business getting better particularly in europe where i see you're getting better. those are the ones i want. i want stocks, by the way, i favor stocks that go higher. again, very old-fashioned. >> we like it. >> do you like it? >> i do like that. >> we're not going to hand over to you in the right time we got to run. we'll see you in a couple of minutes. >> all right. >> exclusive interview on "mad money" with cvs ceo larry merlo. ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪
8:58 am
♪ ♪ ♪ ♪ don't get mad. get e*trade, dawg. servicenow put our this changes everything. you're right sir... everything. no not everything, i mean you're still blatantly sucking up to me gary. brilliantly observed, sir. always three steps ahead. six steps ahead. sixteen. so many steps. you done? a million steps ahead. servicenow. works for you.
8:59 am
the amount of student loan debt i have, i'm embarrassed to even say. we just decided we didn't want debt any longer. ♪ i didn't realize how easy investing could be. i'm picking companies that i believe in. ♪ i think sofi money is amazing. ♪
9:00 am
thank you sofi. sofi thank you, we love you. ♪ what we got, make sure you join us tomorrow "squawk on the street" is next ♪ 0 to 60 in 3.5 ♪ ♪ you got the speed now shut up and drive ♪ good wednesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. futures mildly positive as stocks search for catalyst you got china trade, election day results and now some reports of strategic m&a get morgue attentimore attention. ten year 1.82. productivity no good the first negative print in nearly fou

14 Views

info Stream Only

Uploaded by TV Archive on